The S&P 500 declined 3.4% on Friday after a rebound effort faded into the close, as investors took weekly profits. The benchmark index had started the session down 4.2%, then cut its losses to just 0.5% after the House passed the $2 trillion stimulus bill in the afternoon.
The Dow Jones Industrial Average lost 4.1%, the Nasdaq Composite lost 3.8%, and the Russell 2000 lost 4.1%.
The stimulus bill will provide relief for U.S. households and businesses, as the rising number of coronavirus infections continues to keep much of America in shutdown mode. On a related note, the U.S. surpassed China and Italy for the most confirmed cases of COVID-19.
Before the close, United Airlines (UAL 32.84, -2.71, -7.6%) said it isn't going to conduct involuntary furloughs or pay cuts in the U.S. before September 30. The extended timeline provided a general sense that management isn't expecting much of a rebound in air travel, saying demand could remain suppressed possibly into next year.
In other words, it may have dampened hope for V-shape economic recovery. The market, meanwhile, had already been losing steam from its rebound effort prior to the memo. At session's end, the S&P 500 energy (-6.9%) and information technology (-4.6%) sectors led today's decline, while the utilities sector (+0.5%) closed higher.
Within the Dow, shares of Boeing (BA 162.00, -18.55, -10.3%) fell 10% after Treasury Secretary Mnuchin said the company has no plans of using government aid at this time. Procter & Gamble (PG 110.17, +2.79, +2.6%) bucked the broader trend after the stock was upgraded to Buy from Hold at Stifel.
In earnings news, lululemon athletica (LULU 32.84, -2.71, -7.6%) reported better-than-expected quarterly results, but shares fell alongside the broader market after a strong week.
U.S. Treasuries ended the week on a higher note, driving yields lower across the curve. The 2-yr yield declined three basis points to 0.23%, and the 10-yr yield declined six basis points to 0.75%. The U.S. Dollar Index declined 1.0% to 98.36. WTI crude lost another 4.2%, or $0.95, settling lower at $21.65/bbl.
Reviewing Friday's economic data:
Personal income increased 0.6% m/m in February (Briefing.com consensus +0.4%) while personal spending rose 0.2%, as expected. The PCE Price Index increased 0.1% while the core PCE Price Index, which excludes food and energy, rose 0.2%, both as expected.
The key takeaway from the report would have been that inflation remains subdued and that the income growth is a plus for consumer spending, but with the subsequent shutdown due to the coronavirus, the key takeaway now is that this February report is cold comfort in a world far different than the one that existed in February.
The final reading for the University of Michigan Index of Consumer Sentiment for March was revised down to 89.1 (Briefing.com consensus 95.7) from the preliminary reading of 95.9. The final reading for February was 101.0.
The key takeaway from the report is that it captures the leading wave of the change in consumer sentiment, which is deteriorating rapidly in the face of the coronavirus impact on the U.S. economy. According to the report, the 11.9-point drop from February is the fourth largest one-month decline in nearly a half century.
Looking ahead, Pending Home Sales for February on Monday.
AI
